CBK says banks safe despite fuel scandal

January 13, 2009

, NAIROBI, Kenya, Jan 13 – Central bank Governor Professor Njunguna Ndungu is reassuring Kenyans that the exposure caused to banks that lent money to Triton Petroleum Company is very minimal and cannot cause any instability in the banking sector.

Triton Petrolem and Triton Energy were placed under receivership between December 19 and 20 last year.

A statement from the Governor issued late on Monday indicates that banks lent the oil company Sh2.5 billion, which accounts for 0.0002% of the banking sector’s total assets.

“The amount is not considered material to cause instability in any of the individual banks in the banking sector in general, as the concerned institutions are well capitalised,” the statement read in part.

Kenya Commercial Bank which is one of the financiers expected to lose money promised to issue a statement later on Tuesday.

Other financial lenders that were expected to lose a total of Sh7.6 billion are Glencore of UK, Fortis of France and Emirates National Oil Company.

In the CBK statement, Professor Ndungu further noted that the bank was holding securities to cover the credit exposure. He said the Central Bank was working closely with the concerned banks on the best approach to mitigate against any potential losses.

Meanwhile, Energy Minister Kiraitu Murungi has said that the government has contacted Interpol to help it track down Triton Petroleum Proprietor Yagnesh Devani, who is at the centre of the Sh7.6b scandal.

Murungi revealed on Tuesday that the Kenya Anti-Corruption Commission would be working with Interpol to bring Mr Devani back to Kenya so that he could face fraud charges.

Mr Devani fled the country when his company was placed under receivership over the scam that also involves the Kenya Pipeline Company (KPC), which released stocks to Triton without the oil marketers’ financiers’ authority.

Investigations at KPC into how more than 126.4 million litres of fuel were released to Triton and a forensic audit on the fuel products held at the pipeline have already commenced.

Murungi has said that the government is also trying to trace and recover the assets lost in the scandal.

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